A detailed look at how unaccountable power, sanctioned institutions, and political favoritism fueled one of Iran’s largest corruption ecosystems
A new report from Setareh Sobh exposes how systemic corruption in Iran did not emerge spontaneously—it was engineered and enabled by the regime itself, beginning with political purges and culminating in large-scale financial scandals that continue to destabilize the economy.
According to the report, the “monster of corruption” appeared when the Guardian Council, backed by the regime’s absolute vetting authority, eliminated competent, technocratic, and nationally trusted figures from political life. This process cleared the path for opportunists and unqualified insiders who would later preside over some of Iran’s most destructive economic schemes.
Act I – The Shandiz Scandal
The judiciary targeted the Shandiz International Tourism Development Company after its massive, regime-approved expansion destroyed 50 hectares of farmland near Mashhad. By 2016, the project had accumulated 573 billion tomans in losses. Its CEO, Mohsen Pahlevan, was ultimately sentenced to life imprisonment—yet the political network that facilitated the land seizure and environmental destruction remains intact.
Act II – The Rise and Collapse of Credit Institutions
A wave of unregulated financial entities—including Thamen, Thamen al-Hojaj, Caspian, Tose’e, and Kosar—emerged largely from Mashhad under the watch of regime religious authorities and local power brokers.
These institutions lured the public with unrealistic profit promises, siphoned citizens’ savings, and ultimately collapsed—forcing the government to assume their massive debts. This too was a chain reaction created by regime-sanctioned opacity and patronage networks.
Act III – Military Banks and Their Enormous Losses
A series of military-affiliated banks—Ghavamīn, Mehr Eqtesad, Ansar, and Hekmat Iranian—were found to have accumulated more than 130,000 billion tomans in losses.
Instead of accountability, the regime’s solution in 2018 was to merge them into Bank Sepah, transferring their financial black holes directly onto the national banking system.
Act IV – Bank Ayandeh: Another Cost Transferred to the Public
Formed through the merger of Bank Tat and two credit institutions, Bank Ayandeh accumulated 500,000 billion tomans in losses over 13 years. The bank was then merged into Bank Melli—again transferring the burden onto ordinary Iranians while shielding the political beneficiaries behind the scenes.
Act V – The “Mellal” Financial Empire
Perhaps the most striking case is the Mellal Credit Institution, which was losing 67 billion tomans per day, with total accumulated losses exceeding 96,000 billion tomans by June.
Its founder, Seyyed Amin Javadi, began with a small religious loan fund in Mashhad before transforming it into a sprawling financial operation with 113 branches nationwide. Despite its stated purpose of serving low-income groups, Mellal plunged into speculative activities in currency, gold, land, real estate, and automobiles, helping fuel national inflation and expanding the monetary base.
Mellal then partnered with the regime’s Ministry of Roads and Urban Development to build a 27-story luxury tower in Shahrak-e Gharb, selling units for over 250 million tomans per square meter—an astonishing betrayal of its claimed mission to support the poor.
Former Central Bank governor Valiollah Seif revealed the shocking scale of profit manipulation within these institutions:
- Profit rates as high as 89%
- Cases of individuals receiving 11 to 23 billion tomans in interest
- Deposit interest rates of 40–43% considered “normal” within these networks
- Such practices, Seif emphasized, have no precedent anywhere in the world.
Regime Protection + Impunity = Persistent Corruption
The report notes that instead of prosecuting these institutions, Central Bank governor Ali Salehabadi, appointed in 2021 by the Raisi administration, approved the conversion of Mellal into a full bank just days after taking office—despite documented financial misconduct.
This move was so irregular that the Money and Credit Council openly opposed it, and Setareh Sobh warned at the time that the decision was illegal. Yet the conversion proceeded, shielded by regime interests.
Salehabadi was eventually removed due to mismanagement, only to be rewarded with an ambassadorial post in Qatar—where he now serves under the new administration.
This raises critical questions:
- Why did the Central Bank support the institutionalization of a corrupt entity?
- Why did the judiciary, despite its constitutional duty under Article 156, fail to intervene?
- And why does the political system continue to shield individuals and institutions deeply implicated in economic wrongdoing?
Corruption Is a Feature, Not a Bug
The investigation shows that these scandals are not isolated failures—they form a unified pattern rooted in the regime’s political structure, where loyalty replaces expertise, impunity shields wrongdoing, and economic institutions become tools of personal enrichment.
Until the political machinery that created, protected, and benefited from these networks is dismantled, Iran’s corruption crisis will remain systemic—and its economic consequences will continue to fall on the shoulders of the Iranian people.
